Pharmaceutical patents: High Court strikes out health service claim for compensation

In a decision handed down on 2 August 2017 the High Court has held that alleged fraudulent misrepresentations made by Servier during prosecution and enforcement of a patent relating to the anti-hypertensive prescription drug perindopril (Coversyl) did not entitle the Secretary of State for Health to compensation for losses incurred as a result of delayed generic entry. The Secretary of State based its claim on the “economic tort” of causing loss by unlawful means, arguing that, as a result of the misrepresentations (the unlawful means), the health services had been obliged to pay a higher price for the drug up to the point at which invalidity of the patent was established.

Background

Servier’s supply of Coversyl, protected by European patents, began on the UK market in 1990. The present action related to a later patent granted to Les Laboratoires Servier SAS for the alpha crystalline form of the perindopril salt (patent 947) in 2004. In August 2006 Les Laboratoires Servier SAS and its exclusive licensee, Servier Laboratories Limited (together, Servier), obtained an interim injunction in the English Patents Court against a generic version of perindopril put on the market by Apotex. The 947 patent was also upheld by the EPO in opposition proceedings. However, on 11 July 2007 following a full trial, the English Patents Court held that the 947 patent was invalid for lack of novelty/obviousness over one of Servier’s original perindopril patents (patent 341), and this decision was upheld by the Court of Appeal in May 2008. In May 2009 the EPO Board of Appeal also revoked the European patent 947 as a whole.

The Secretary of State for Health argued that Servier had obtained the 947 patent, defended it at the EPO and obtained the interim injunction in the English courts by means of misleading and dishonest misrepresentations made to both the EPO and the English courts. He contended that this amounted to deceit and gave rise to a right of action in the tort of causing loss by unlawful means, the deceit being the unlawful means and the loss being that caused by the higher price payable as a result of the interim injunction.

The misrepresentations

The 947 patent has had a troubled history in the English court with Pumfrey J in the High Court referring to it as a “try-on”, “…the sort of patent which can give the patent system a bad name”. In the present case the Secretary of State argued that the patent application had contained express or implied representations that the alpha form was novel and not obvious and that these representations were repeated and/or further relied on in opposition proceedings before the EPO and in obtaining interim relief before the English court. However, these representations were untrue, because Servier’s earlier patent (341) led to the production of the alpha form as its inevitable result, and the perindopril marketed by Servier both before and after the patent was applied for was in the alpha form. The Secretary of State’s contention was that those making these representations on Servier’s behalf knew or were reckless as to these matters and hence that the patent was obtained, defended and enforced by means of misrepresentations made dishonestly or recklessly.

It should be noted that in making his comments referred to above Pumfrey J pointed out that Servier had done nothing unlawful, and in the present case the judge (Roth J) comments that since (unlike the position in the US) there is no doctrine of ‘fraud on the patent office’ in the UK or at the EPO it may be ‘challenging’ for the Secretary of State to establish the express and implied representations referred to above. However, for the purposes of the present judgment the judge assumed that the allegation of deceit (which constituted the unlawful means) was made out, allowing him to focus on other aspects of the tort.

Is the tort of causing loss by unlawful means applicable in situations of this kind?

There were three main reasons why the tort was not applicable in this case:

A recent Supreme Court decision has confirmed that the tort only arises where the unlawful means consist of acts that are intended to interfere with a third party’s freedom to deal with the claimant. A typical example would be deliberate violence or fraud against customers or suppliers for the purpose of taking away the claimant’s business. In the present case the misrepresentations were made to the EPO and the courts and could not be said to take away their freedom to deal with the Secretary of State.

Recent case law had emphasised the need to keep the tort within a narrow ambit. If the Secretary of State’s arguments were correct the right to claim against Servier would cover not only all the various UK Health Authorities but also all potential generic competitors, private medical insurers paying higher prices for perindopril and potentially foreign health authorities and insurers as well. This would be the opposite of keeping the tort within a narrow ambit.

Patents are a creation of statute and the statutory regime prescribes rights and remedies. If those who suffer economic loss as a result of misrepresentations to the patent office or courts could use this common law tort to claim damages, this would circumvent the legislative balance set up by the statute.

Implications of the decision

The decision is likely to be welcomed by patent owners. Victory for the Secretary of State would have raised considerable uncertainty about the open-ended extent of the liability which could arise as a result of dealings with the patent office where the question of whether information has been withheld or misrepresented may be complex and unclear. The decision underlines that competition law is the proper means to regulate disputes about alleged abuses of this kind, and, indeed, the Secretary of State’s claim formed part of a larger dispute between the parties involving competition law issues also.

Case: Secretary of State and others v Servier Laboratories Limited and others, High Court (Chancery Division) 2 August 2017